A bread-and-butter category for equity investors

You can invest in stocks of each type of market capitalisation by investing in multi-cap funds

A bread-and-butter category for equity investors, multicap funds have exposures to large-, mid- and small-cap stocks. They have held their ground in the last one year, while large-cap funds have stumbled. Tracking the Nifty and the Sensex, pure large-cap funds now sport a negative return for one year, while multi-cap funds have a marginal gain of 1.4 per cent.

The multi-cap category features funds that usually park anywhere above 60 per cent of their assets in large-cap stocks and the rest in mid and small caps. They save investors the trouble of arriving at relative allocations between large-, mid- and small-cap stocks. Most funds in this space also use some amount of tactical reallocation between large/mid caps based on market conditions, though they don't swing their allocations to extremes.

An analysis of the top rankers shows that growth-style funds. The trailing three-year CAGR for the category is 16.9 per cent and the five-year CAGR is 10 per cent. Given that mid- and small-cap stocks do add on a volatile element, SIP returns on multi-cap funds tend to be significantly better than point-to-point returns. They now stand at 18.1 per cent for three years and 16.1 per cent for five years.

 Most-popular stock holdings

Company	Fund count	Net assets (%)	S&P BSE 200 (%)
HDFC Bank	76	6.5	5.49
Infosys	73	5.37	5.69
ICICI Bank	71	4.18	3.92
Axis Bank	66	2.87	1.96
Maruti Suzuki India	64	3	1.58
State Bank of India	59	3.11	1.84
Larsen & Toubro	57	3.36	2.69
Sun Pharmaceutical Inds.	53	1.34	2.29
TCS	52	1.66	3.22
ITC	51	1.14	4.75
Tata Motors	49	1.78	2.3
Reliance Industries	49	2.18	4.31
Indusind Bank	49	1.8	1.21
HCL Tech	48	1.09	1.21
Ultratech Cement	42	1.01	0.73

The category is quite popular and manages R1.11 lakh crore in assets as of November 30, 2015.